Reform law forcing 20% of small business owners to alter health plans

One-fifth of small business owners who offer health insurance to their workers expect to significantly change their benefits package the next time they renew their health plan as a result of federal health reform, according to a new survey.

About 12% of small business owners say their health plans are or will be likely to be cut because of federal health reform.

Moreover, an “overwhelming majority” or small business owners do not expect the federal health reform law to reduce costs or their regulatory burden, according to a new National Federation of Independent Business survey marking the one-year anniversary of the passage of the Patient Protection and Affordable Care Act in March 2010.

Likely changes to plans would include a decrease in benefits, an increase in employee cost-share, or both, according to the survey. Employers who even slightly alter their benefits packages to reduce costs will likely be exposed to more regulations and cost increases in the future under the health reform law’s provisions, the NFIP said.
The survey found that nearly two-thirds of owners agree that the law will cause health insurance premium increases, without improving care.

“When it comes to health-insurance reform, perception is reality. The majority of America’s small employers simply do not believe that the law will accomplish most of what it promised to do,” said William J. Dennis, NFIB Research Foundation senior fellow and report author, in a statement. “A year after PPACA’s passage, small-business owners are unconvinced that the law will reduce their premiums or incentivize them to cover more employees. In fact, the survey shows they feel strongly that PPACA will increase taxes, add to the deficit, not slow costs or ease their administrative burdens, and will not dramatically improve public health. This is far from the panacea that was promised to this vitally important population.”
The net number of small employers (those employing 50 or fewer) who provide coverage is largely unchanged, (42 percent) from the number offering prior to the passage of PPACA, suggesting that the law did not provide significant reason for non-offering employers to begin covering employees, according to the NFIP.

Small employers who do offer health insurance are also unlikely to drop their coverage over the next 12 months. Generally speaking, employers that offer health insurance have a far more pessimistic view of PPACA and its anticipated effects, as compared to those who do not offer insurance.
Almost 87% of non-offering employers say they are either “not too likely” or “not at all likely” to be offering coverage a year from now, suggesting that the law’s incentives to providing coverage are ineffective, according to the NFIP.
The data for this report were drawn from a nationally representative telephone survey of small employers during the latter part of April and the first half of May, 2011. The survey was conducted for the NFIB Research Foundation by the polling firm Mason-Dixon, Inc. of Columbia, Md.

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